Media coverage
Al Bayan (UAE) · 2012-06-22
The article examines the spread of lavish, conspicuous consumption across the Arab world alongside weak production and the near absence of joint Arab investment, despite the availability of agricultural land, labor, and capital. It presents examples from Egypt, Saudi Arabia, Iraq, and Palestine showing the gap between high spending and heavy imports on one hand, and declining production and weak economic planning on the other. It also cites experts and specialists calling for clearer economic policies, a stronger state role, and joint Arab investments to reduce dependence on imports and strengthen local production.
The article examines the spread of lavish, conspicuous consumption across the Arab world alongside weak production and the near absence of joint Arab investment, despite the availability of agricultural land, labor, and capital. It presents examples from Egypt, Saudi Arabia, Iraq, and Palestine sho…
The Arab world has for quite some time been suffering from a fever of extravagant, ostentatious consumption, not only in the sphere of countries with abundance, but even in those living in scarcity, where large numbers of citizens are below the poverty line. More troubling and bitter still is that most Arab countries suffer from a marked decline in production, which makes them import not only necessities, but even the lowest forms of luxuries. If we compare our condition with countries such as the Asian Tigers, which do not abound in vast resources, we find that they have made appreciable strides in production to the point of achieving self-sufficiency, and have even been encouraged to export and attain a distinguished standing among the nations of the world.
The question that always imposes itself is: why is joint cooperation among our Arab countries entirely absent, and if it exists, why is it confined to narrow limits and exercised timidly? If we wish to shed even some light on inter-Arab financial investments among all our countries, we will find them to be but a drop in the ocean, despite the existence of vast areas suitable for agriculture, trained and qualified labor, and the large sums of money that go to the West.
There is no doubt that the absence of scientific plans, the lack of clarity of visions, and future strategy have all been factors that led to the decline of most of our countries and the increase in rates of consumption, especially extravagant consumption.
We open this file here, despite our conviction that the many labels such as the Arab Common Market, cooperation in the fields of investment, customs exemptions, and others, have neither availed nor helped in achieving the hoped-for aspiration, filling millions of empty stomachs, and preventing many from falling into the abyss.
Opinions have diverged, proposals have varied, and conceptions have differed regarding how to emerge from the bottleneck and achieve at least the minimum level of ambitions in joint cooperation and inter-Arab investments that would realize an Arab renaissance in the fields of production and, in some way, curb consumption, whose snares we have fallen into and from whose traps we have not freed ourselves.
## Egypt: Economic Contradictions and Political Upheavals that Exploded the Situation
Egyptians suffer from enormous economic contradictions: at a time when production rates are declining, consumption rates are increasing in return, especially among the wealthy class, whose spending rates on luxury goods and their import from abroad rise from time to time. Although the 25 January Revolution succeeded in somewhat reducing rates of extravagant consumption, it has not, until now, succeeded in increasing production, which has continued to stall and falter day after day.
The latest official statistics in Egypt from the Central Agency for Public Mobilization and Statistics, regarding Egyptian household spending, state that the average total expenditure of a single household during fiscal year 2010–2011 reached EGP 19.3 thousand, compared with EGP 17.6 thousand in the previous year. The number of Egyptian households at the end of last year stood at 18.5 million households, of which 8.5 million were in urban areas, representing 46% of total households, and 10 million households were in rural areas, representing 54% of the overall total.
The agency revealed that 90% of households own a color television, 6.1% own a car, 91.2% own a refrigerator, 40.5% of households subscribe to a landline telephone, 20.6% own an automatic washing machine, 85.8% own a mobile phone, 6.5% own an air conditioner, and about 22.1% of households own a computer or laptop. Some 43.1% of households have a water heater, and 7.9% use the internet, while 18.8% own a vacuum cleaner.
In the same context, a report issued by the General Administration for Control of Exports and Imports revealed that Egyptians spend more than $4 billion annually importing grape leaves from Geneva, peacock meat from Iran, red caviar fish, jumbo shrimp, and lobster. More than EGP 41 million is also spent importing premium types of ice cream and gelati.
The report pointed out that more than $2 million is spent annually importing food for dogs and cats, and that Egypt’s imports of durable and non-durable consumer and entertainment goods have approached $5.4 billion, representing 8.16% of total imports. Egyptians also spend EGP 1 billion annually on Viagra, EGP 15 billion on narcotics, EGP 13 billion on private tutoring, and EGP 3 billion on external textbooks.
Forecasts by the British firm Business Monitor indicate that sales of computer devices in Egypt will rise by 12% in 2014, in addition to an increase in the penetration rate of personal computers from 7% currently to 19% during the current year. Egyptians’ spending on mobile phones is rising by 11% annually, reaching $3.2 billion by 2014.
In light of the gap between production and consumption in the Arab world, the economic expert Dr. Hamdi Abdel Azim says that the culture of compulsive purchasing is closely linked to Arab societies, which consume nearly one-third of the entire world’s production, while their own production is less than that. There are many reasons that make the Arab citizen the greatest consumer and importer, most notably the scarcity of water in many of those states, including states with vast desert areas. Rates of consumption and spending differ from one group to another, from one class to another, and indeed from one country to another.
As for the situation in Egypt, the class fundamentally linked to production sees its income rate rise compared with others who are not directly linked to production, such as the public sector and the business sector, where the worker receives his low wage whether the company makes a profit or a loss. This demonstrates the continued import and purchase of recreational materials or entertainment by some Egyptians after the revolution—namely, a specific class of the wealthy and business owners who pour large tax revenues into the state treasury compared with others.
He pointed out that this class, which pays more taxes than the category of business owners, relies on extravagant spending on certain recreational goods, while the expenditures of the lower class are concentrated on extravagant spending on items such as Viagra and sexual stimulants.
He explained that Egyptian society passed through several phases to become a consumer society. During the era of the late President Gamal Abdel Nasser, society relied primarily on production. After that, Anwar al-Sadat wanted the people to live a prosperous life after the wars they had fought, so he adopted the Infitah policy, which pushed the Egyptian street to rely on consumption more than production. This was followed by privatization processes that included Egypt’s largest public companies.
The economic expert Dr. Abdel Hafiz al-Sawy noted that the rise in domestic spending on luxury goods is basically the result of the fact that a class constituting a very small proportion, not exceeding 10% of Egyptian society, controls the entire economy and owns the largest share of society’s wealth. This has contributed to the concentration of extravagance and spending on luxury goods in one class, and its decline in another class. He also pointed out that the volume of spending on non-essential goods differs from one class to another, and according to the quality or type of the commodity.
International reports on conditions in Egypt had revealed that matters changed after the revolution and during the current transitional phase, as 65% of Egyptians reconsidered their spending rates, while 49% of them began reducing spending on ready-made meals, 41% reduced entertainment and going out for leisure, 45% reduced extravagance in buying ready-made clothes, and 11% reduced their use of their cars.
The losing candidate in the presidential election race, Khaled Ali, affirmed that one of the reasons for the contradiction in the performance of the Egyptian consumer is that the poor are becoming poorer and the rich are becoming richer, amid the chaotic approach to dealing with various economic policies. Accordingly, the law must be respected, along with the right to knowledge and transparency, freedom of access to information, guaranteeing competitiveness, and setting a plan to build the economy that ensures local production is not marginalized and dependence on imports is avoided. This would be through state intervention in the economy, especially since the state has many advantages and can undertake giant, major projects, or enter into joint investments with Arab countries to limit many production-related problems. He pointed out that local production from public sector companies and local private companies collapsed because of the policies of previous governments in supporting foreign investors at the expense of local ones, which led to a decline in domestic production.
Saudi Arabia.. 19 million cups of tea daily
A recent study concerned with tea consumption worldwide revealed that Saudi Arabia ranks second in the Arab world after Egypt in terms of tea consumption, with more than 19 million cups daily. Tea trade in the Kingdom exceeds 638 million riyals, as per capita expenditure on tea ranges between 22 and 24 riyals annually. This is due to tea’s association with the concept of meeting and communication, which is considered one of the most prominent features of the Saudi social fabric, in addition to the healthy habits that members of society are keen to maintain in their daily lives, as tea is regarded as one of the most prominent healthy beverages, making it the most consumed after water.
Tawfiq Al-Akhras, Marketing Manager of the Foods and Beverages Division at Unilever in the Kingdom, said that they take upon themselves the responsibility of educating consumers about how tea is produced, its impact on the environment, and its health benefits, as the world is witnessing notable progress in research on the benefits of tea. Many studies have been conducted dealing with everything related to this industry in a way that serves tea farmers around the world and tea consumers and enthusiasts alike. Studies showed that the world consumes more than 24.5 billion cups of tea weekly.
Tea leaves are rich in theanine, a non-protein amino acid found naturally in dry tea leaves, while it is rarely found in other foods. A single cup of tea contains between 14 and 18 milligrams of theanine.
The theanine found in tea contributes positively to enhancing the psychological state and mental clarity of those who drink it. All types of tea contain natural theanine, and the positive results of theanine have been studied at Oxford University in the United Kingdom, the Nathan Kline Institute in New York, and other leading scientific institutions in the world. It has been confirmed that theanine has the ability to cross the blood-brain barriers and works to improve brain functions, helping to create a sense of comfort and improve the ability to think and concentrate. It has been found that drinking two to three cups of tea daily improves intellectual performance, and theanine is believed to play a fundamental role in that.
Iraq.. Astronomical figures: the cost of reliance on imports
Iraqi markets are almost devoid of local products—industrial, agricultural, consumer, and others—because of the absence of economic planning, the retreat of reconstruction plans in the nine years after the invasion and occupation, and the prior orientation toward abolishing the role of the public sector, which had directed the economy before the occupation, with no alternative in place, as the country lacks a private economy capable of entering into competition with imports. For nine years, up to now, production facilities have been closed and their contents looted, making the process of bringing them back to life nearly impossible, especially with the spread of the epidemic of administrative and financial corruption. Talk of importing luxuries is astonishing: an oil country imports petroleum derivatives worth hundreds of billions of dollars, including those used to operate power stations that have been almost absent for nine years. When speaking of electricity, it must also be pointed out that agriculture depends on it as well in pumps that draw water from the rivers, whose levels have risen during the rainy seasons.
In this regard, the words of the poet Badr Shakir al-Sayyab in his famous poem “Rain Song” ring true: (“Rain… rain… and in Iraq there is hunger… No year has passed in which rain did not fall in Iraq… No year has passed in which there was no hunger in Iraq.”)
Iraq, which now depends on oil for 95% of its budget, spends countless billions on imported kerosene, imported gasoline, and gasoil “mazut,” which is used to operate government and private electricity generators, while international sources confirm that the cost of producing one thousand megawatts of electricity does not exceed one billion dollars. Yet no one knows anything about the fate of the tens of billions spent on contracts to establish “giant” electricity generation plants, in addition to contracts for importing electricity and fuel from neighboring countries. In this regard, the office of the religious authority (marja) Sheikh Qasim Al-Ta’i conducted a field study of the electricity grid, showing that Iraq is capable of covering the shortage in electric power with a total amount estimated at 20 billion dollars.
The figure means bringing 20,000 new megawatts into service, in addition to the current output, regarding which the data are conflicting, and which is close to 5,000–6,000 megawatts, approximately the same as electricity production during the years of sanctions before the American invasion, when supply was close to twenty hours daily, despite the presence of factories, military manufacturing, commercial activity, casinos, and so on. The figure of 20 billion dollars is considered “pale” in comparison with what Iraq and Iraqis spend on electricity that is still missing. The study showed that the total spending of government institutions and the Iraqi people, with what they consume in generators and other accessories, annually reaches more than 151 trillion dinars (about 135 billion dollars)."
Palestine.. A pattern of luxury at odds with a bitter reality
Many economic experts agree that there is a noticeable increase in consumption rates among Arabs in general, at a time when joint investment among the countries of the region is absent and the level of productivity is declining compared with the high volume of consumption and imports, day after day.
Dr. Omar Shaban, Director of the PalThink for Strategic Studies in Gaza, says that this issue applies to most countries of the Arab world, which consume more than they produce. The food bill, even in Arab countries that encompass vast agricultural lands such as Egypt, Iraq, Algeria, and Morocco, depends heavily on foreign sources for the supply of many goods and necessities. For example, Egypt produces 9 million tons of wheat annually and imports about two-thirds of its needs from abroad. There has been much criticism over this issue and questioning as to why the Arab world has not reached the stage of self-sufficiency, at least in basic commodities.
Even poor countries consume luxury recreational goods that, in the view of ordinary people, they do not need. In the city of Ramallah, there is a recreational consumption pattern that does not fit the Palestinian reality under occupation, where 60% of the economy depends on the outside world, and the Palestinian Authority receives two billion dollars in annual aid. The number of luxury cars roaming the streets of Ramallah shocks visitors and contradicts the reality of daily life. The majority of the people cannot bear the high costs, and citizens are forced to work several jobs in order to meet the needs of their families. World Bank indicators released a few months ago also point to a decline in the level of Palestinian productivity, while the productivity of the government sector is even harsher, and its efficiency is lower than before.
The Palestinian economy in the West Bank depends on foreign aid, while Gaza’s economy depends on spending. As is the case in Ramallah, the reality in Gaza is harsher, within a society in which nearly two-thirds live below the poverty line, while there are consumption patterns that are wholly inconsistent with the reality of the Israeli blockade that has controlled the Strip for years, including luxury cars and consumer habits that do not reflect the true reality.
Strangely, the volume of intra-Arab investments does not exceed 6–8%, which is very low and does not promote the desired economic integration, compared with the volume of their investments with Western countries.
Dr. Nasr Abdel Karim, lecturer at Birzeit University and expert in economic affairs, confirms that for years the volume of Palestinian consumption has far exceeded the volume of gross domestic product, and this has exacerbated the trade balance deficit. Part of the issue is linked to the consumer and social customs and traditions practiced by individuals, especially on occasions that drain people’s pockets. In addition, the rate of consumption is rising while citizens’ conditions and income levels remain unchanged, with no adjustment in line with the rising cost of goods and services. Abdel Karim pointed out that the volume of consumption exceeds the level of GDP by an estimated 120%.
He affirmed that the level of luxury consumption can be observed in the wealthy Arab states, specifically the oil states, where per capita income is high, and among categories and classes with a high economic, financial, and social status. Luxury behavior depends on income level, but Abdel Karim pointed out that Arab societies are witnessing high levels of unemployment and poverty and suffering from marginalization, especially among youth and university graduates, and luxury behavior cannot be generalized to all people.
Dr. Nabil Kukali, head of the Palestinian Center for Public Opinion, said that the Arab people are, first and foremost, a consuming people. Heavy imports of goods from abroad lead to a deficit in the local trade balance, and consequently to rising unemployment and the scarcity of job opportunities, especially among youth and recent graduates. Kukali stressed that all Palestinian sectors—“traditional industry, agriculture, trade, etc.”—have been greatly affected by foreign imports.
Many factory owners have shut down their factories and have begun importing Chinese goods and manufactures and selling them to their customers. This has led to the spread of unemployment and the decline in job opportunities. For example, a factory that used to employ 50–60 workers is now run by one or two workers, because there is no production or manufacturing in it, but rather an import-and-sale process. The import of goods is also not limited to one commodity rather than another; there are imports of expensive goods such as cars and furniture. The import process is carried out according to the merchant’s desire and not in accordance with the required specifications, standards, and quality. There are also many goods and manufactures whose quality is lower than that of the national product, yet they still witness strong demand and uptake from citizens.
He called on the competent authorities to protect local goods and industries and to provide an attractive investment environment that would enable investors to open projects that provide job opportunities for citizens and industries of high quality.
According to data from the Palestinian Central Bureau of Statistics, the price level in Jerusalem recorded a slight increase during last May of 0.07%. This increase resulted mainly from a rise in the prices of alcoholic beverages and tobacco by 2.00%, furniture, furnishings, and household goods by 1.43%, and restaurant, café, and hotel services by 0.42%, despite a decline in medical services prices by 1.38%, prices of miscellaneous goods and services by 0.63%, and prices of food items and refreshing beverages by 0.16%.
Prices in the West Bank also recorded an increase of 0.18% during May 2012. This increase resulted mainly from a rise in the prices of food items and refreshing beverages by 0.47%, medical services by 0.29%, and restaurant, café, and hotel services by 0.18%.
## Bahrain.. Arab peoples are required to implement self-sufficiency programs
The Arab citizen, and in the Gulf in particular, lives in a state of extravagance in consumption, whether at the collective or individual level. This can be observed in the number of fast-food restaurants that have spread through most Arab cities, and in the lines of consumers at all restaurants serving main meals from breakfast to dinner. All of these restaurants depend entirely on importing their food materials from abroad. Shopping carts after the monthly salary is received also show extravagance and excess in purchases, and the end result of excess purchasing is the garbage dump, because the volume of purchases does not match the individual’s needs.
This is how activist Khaled Mousa Al Balushi began his remarks, while at the same time expressing his regret over the inability of most countries to achieve even minimal self-financing of consumer goods, along with total reliance on imports from abroad. This makes consumer goods prices volatile, and their availability remains dependent on economic conditions such as oil prices, which affect increases in transport costs and thus raise the cost of the commodity.
Among the most important matters on which our states must focus, especially in light of the security and living conditions they are experiencing under the Arab Spring, is moving toward investment in local production that covers demand for consumer goods, employing all human resources at all scientific and practical levels, and, most importantly, directing Arab investment funds into local industries instead of foreign investment.
Al-Balushi concluded his view by stressing that the greatest responsibility lies with the Arab governments, which must turn their attention to self-sufficiency in all their consumer needs. This process would also help solve many of the problems from which these countries suffer, such as unemployment, stagnation in local trade, and food shortages in a number of Arab countries. The Arab citizen must also discipline his consumer behavior by sorting and reducing monthly purchases, excluding items that accumulate only to meet their fate in piles of garbage.
For his part, journalist Issam Al-Khayyat said that the Arab states are classified by the United Nations as developing consumer countries. The region was civilizationally and scientifically prosperous in the middle of the last century, during the period that was called the Dark Ages for Europe, as a result of the openness of the Islamic state that ruled the Arab region as one land. Open-minded Muslim scholars developed many sciences, theories, and principles that are still taught at Europe’s most prestigious universities. As a natural result, when lands and peoples are unified, civilization flourishes and becomes integrated within itself.
After the Islamic state turned into small statelets, fragmented into regions, and colonial powers took control of its riches, the Arab peoples became first-degree consumers. Their wealth and natural resources, extracted from their lands, came to be used in manufacturing industries in industrialized countries, only to return to the Arab consumer in the form of basic, recreational, and luxury goods.
## Qatar: “Debt... Shame” Campaign to Combat Consumer Debt
Consumer loans have seen a continuous increase in Qatari society and have multiplied significantly over the past six years…
Text © Al Bayan (UAE) — archived here with attribution to the source. — Machine translation for archival reference. — Original source